Energy Strategies Special Report - Part 1of 6

To others, the co-founder and co-CEO of Snowmass, CO-based Rocky Mountain Institute (RMI), a nonprofit applied research center, is an intellect on resource efficiency and the recipient of numerous awards and honorary degrees, the author or co-author of hundreds of papers and more than two dozen books, and a consultant to industry and governments worldwide.

More importantly, he is the quintessential problem-solver.

It all began with a question – in fact, a different and somewhat controversial series of questions – that challenged conventional supply-side thinking during the oil crisis of the 1970s. In outlining first a continuation of the status quo, in which depletable fuels would be used inefficiently and provided from ever more complex and centralized plants, he urged the United States to follow a “soft energy path,” in which the energy problem was redefined. “The relevant question is not simply where to get more energy, of any kind, from any source, at any price. Rather, it is a series of inter-linked questions. What do we want energy for? What are the end-uses we are trying to provide, such as comfort and light …? How much energy, of what kind, at what scale, from what source, will meet each of those end-use needs in the cheapest way?”

Such recommendations – now accepted practice by general industry – inspired a generation of leaders and decision-makers. At the time, he was still in his 20s.

Twenty-five-plus years later, Lovins graciously accepted Buildings’ invitation to an interview. In answering our questions, however, he asked quite a few of his own.

BUILDINGS: Here we are, more than 25 years after you introduced the soft energy path. Where are we now, and are there many lessons still to be learned?

LOVINS: Total U.S. energy consumption is now within a couple of percent of the soft energy path graph that was so controversial 26 years ago. In that respect, we’re doing very well.

The biggest and fastest growing energy source in the country is more productive use of energy. In the past five years, our energy intensity has been falling by about 3 percent a year, and in the past 25 years, that reduced intensity – that is, less energy per dollar of GDP – has come to provide two-fifths of all the energy services we get. So it’s five times our domestic oil output or 13 times our oil imports from the Persian Gulf. That achievement deserves more respect than it gets.

There is a tendency among people who’ve grown up on the supply side to ignore or dismiss or understate the demand-side achievement and potential, but they do so at their peril. When President Reagan came into office 21 years ago and strongly stimulated the supply side, he didn’t realize that the country was in the midst of its fastest-ever gains in energy efficiency. From 1979 to 1985, for example, GDP grew 16 percent, oil use fell 15 percent, and Persian Gulf imports fell 87 percent. But he went ahead and stimulated supply all the same. The supply was slower to build than the efficiency gains, so by the time supply was expanded, there wasn’t enough demand and revenue to pay for it. Prices crashed in the mid-80s from a surplus of supply, and many producers were ruined. This was a very bad movie, and we don’t need to see it again.

But we risk doing so if we don’t realize that starting in 1996, despite what were (through ’99) record-low and falling energy prices, the United States has nearly matched the speed of savings achieved from 1979 to 1985 after the second oil shock. The difference this time is that we now have rapid deployment available in supply as well, because we have micro-generation and renewable options that weren’t yet cost-effective 20 years ago. So now, any supply option that is big and slow faces a redoubled risk of getting to the finish line too late to pay for itself.

What’s changed since my ’76 soft-path graph is simply that renewables are lagging about 20 years behind the take-off I’d contemplated, because I’d explicitly assumed a supportive policy environment … but we got mainly a hostile one.It has succeeded to the extent that many of the technologies pioneered in this country – like windpower and photovoltaics – we now have to import from Denmark and Japan, respectively. And that is entirely self-inflicted.

However, renewables and distributed or decentralized power generation generally – renewable or not – are now entering a rapid take-off of the kind that we should have done 20 years ago.

BUILDINGS: Will this next cycle be less of a struggle?

LOVINS: I think so, and part of the reasonis that it is now being driven by a wide variety of market factors, including commercial real estate developers and managers. One of the more intriguing signposts to where we’re headed is the Condé Nast Building at 4 Times Square. You may recall that with doubled ventilation rates, daylighting, and so forth, it uses half the normal amount of energy, yet comes in at market median costs. But because largely of mechanical savings from the more efficient design – and we could even dobetter on that – it ended up able to install fuel cells and integratephotovoltaics into the south and west elevation spandrel. This meant a win-win for the developer [the Durst Organization], which was able to recruit premium tenants quickly at premium rents by saying that whatever happens to Con Ed, your computers are likely to stay on: The two most reliable known power sources are right in the building.

That is starting to become part of the high-end real estate value proposition and finance package. And it’s also a prime opportunity for retrofit in many cases.